Realistic Prep For A Rental Budget You Can Rely On
Whether you’re preparing to put your first foot in the rental market, or are simply considering a move from one rental property to another, budget matters. After all, like mortgage applicants restrained by affordability criteria, renters need to know that they can comfortably afford the rental in question for the duration of an agreed term.
Your rental budget should especially determine everything from the types of properties that you consider through to the length of any agreement. The question is, what exactly goes into prepping a reliable rental budget that stands the test of this tricky market?
Always factor for upfront costs
Many renters make the fatal mistake of entirely overlooking upfront costs at the budgeting stage. In reality, though, highly competitive rental markets in most areas now require deposit payments of at least two or so months’ worth of rent, as well as the first month paid in advance. As such, without a floating budget of at least $2,000, it’s increasingly difficult to secure the best properties. For new renters, this largely means saving up until there’s a decent amount in the bank. For existing renters, ensuring 100% returns on rental deposits, as well as saving as much as possible during the end of an existing tenancy, is essential for positive rental guarantees moving forward.
Remain realistic about size
The relatively small monthly sums of a rental agreement can often see us securing properties that, were we buying, would be entirely out of budget reach. However, even when saving in the short-term, higher rental costs throughout long-term tenancies soon add up. As such, while it may be tempting to settle for the biggest rental that you can realistically afford, it’s not often a good idea to do so. Instead, it’s typically best to buy based on the lowest affordability for what you truly need. For instance, if you’re moving into a rental alone or with a partner, something like these studio apartments for rent would be far more realistic than a three-bed that leaves most rooms unused. By buying yourself this small bit of leeway, you guarantee a more comfortable living experience that lasts, as well as an easier way to save that get-out budget for the duration of your stay.
Know what you stand to lose
If a rental isn’t kept to a reasonable standard, you could both lose your upfront deposit, and face additional charges when you come to leave. With this in mind, budgeting for a rental also means considering the money you’ll need to maintain it, including expenses like cleaning equipment, gardening tools, paints, or even carpet replacements etc. when you leave. Again, freeing some of your budgets as mentioned is going to help here, but you also need to make sure that your budget factors for these considerations upfront so that you can save yourself later.
Long term, renting can be far pricier than homeownership. Make sure you don’t experience the sting of that reality by taking these budgeting pointers into account both before, and during, your rental journey.
